Changing business cultures (2)

The engineering business where I had my first job was GEC-Marconi – this had been an extremely successful business from the 1970s to the early 1990s but then failed dramatically.

Traditionally GEC-Marconi was an example of what Goold and Campbell, writing in the 1980s, called ‘financial control’: the central office, under Lord Weinstock, set the individual business units tight financial targets, but allowed business units a lot of autonomy so long as they operated within these. But the approach also worked because Weinstock sought out profitable areas of business, many of them with the public sector as clients. GEC-Marconi did well out of the nationalised telecommunications, power, and rail industries and out of defence during the cold war. That business landscape has disappeared completely, and the financial control strategy wouldn’t work for a big engineering company today.

Update (1 July) – the reference to nationalised industries is relevant to today’s news that the train service on the East Coast main line is to be taken back into public ownership. Predictably, one of the narratives surrounding this has been people suggesting that the whole rail network should be nationalised. It’s worth remembering that GEC and others did very well out of the nationalised rail system in the 1960s/70s/80s and it’s naive to suggest that in a nationalised system none of the revenue from rail fares finds its way to shareholders.